Analysis of Intas-mAbxience Biosimilar Licensing Deal for Investors
Analysis for Layman:
Intas Pharmaceuticals, an Indian pharmaceutical company, has signed a licensing agreement with mAbxience, a Spanish biopharmaceutical company, to market and distribute mAbxience’s biosimilar version of the rheumatoid arthritis drug etanercept in over 150 countries.
A biosimilar is a biological product that is highly similar to an already FDA approved biological product known as the reference product. Etanercept biosimilars aim to match the reference product Enbrel in terms of safety, purity, and potency.
This deal will allow Intas to sell mAbxience’s etanercept biosimilar in major markets like Europe and the US once patents on Enbrel start expiring from 2028 onwards. Enbrel currently has annual global sales of $11 billion, so there is a large market opportunity for biosimilars.
Impact on Retail Investors
This licensing deal signals Intas’ intent to be a major global player in the biosimilars space and expands its footprint across Europe and US markets.
As a retail investor, this presents an opportunity to benefit from future growth in the global biosimilars industry which is expected to reach $90 billion by 2030. Intas stands to gain significant revenue sharing from the high sales of etanercept biosimilar in the developed markets.
Retail investors should analyze Intas’ current valuation in terms of price-to-earnings ratio compared to industry peers to ascertain whether Intas stock has upside potential from this deal contributing to top and bottomline growth in the long term.
The deal also highlights the rapidly evolving competitive dynamics in the global biosimilars space with many deals happening for key blockbuster biologic drugs going off-patent. As an investor, this translates to more options to diversify your pharma exposure via stocks beyond generics into biosimilars as well which can piggyback off established reference biologics.
However, risks remain around the outcome of patent litigation that large innovators like Amgen face in defending their intellectual property. Delays in regulatory approvals for biosimilars and competition from rival biosimilars can also impact profit margins. So retail investors need to monitor these risks.
Impact on Industries
This deal impacts several industries globally:
Indian Pharmaceutical Industry: The deal highlights India’s growing competence in biosimilars and ability to penetrate regulated markets like Europe and US. Domestic pharma companies like Biocon, Dr. Reddy’s etc stand to gain from more such partnerships and bolster India’s position as the “biosimilars factory” of the world. It accelerates learning curve for Indian pharma to develop and manufacture more complex biosimilars.
Global Pharmaceutical Industry: The deal signals a competitive threat to innovators like Amgen as lucrative biologic franchises now face biosimilar competition eroding market share. Deal activity in the global biosimilars space will intensity among both emerging and developed market players. We can expect realignment/consolidation activity potentially via M&A.
Global Biotechnology Industry: The biosimilars licensing deal will drive greater innovation focus for biotech firms to develop more cutting edge therapies in immunology, oncology etc to defend market share loss from off-patent biologics. Biotech valuations may adjust downwards due to this additional competitive pressure.
Long Term Benefits
This biosimilar licensing deal offers several long term benefits:
For Intas & mAbxience:
- Cost-effective access to highly regulated markets where biologic drugs are extremely expensive presently
- Strong commercialization engine to scale globally
- Revenue sharing upside from high-sales drug
For Patients & Payors:
- Expand patient access for expensive biologic treatment via cheaper biosimilar alternatives
- Alleviate pricing pressure in developed healthcare markets
- Savings from substitution of reference medicine to biosimilar
For Emerging Markets like India:
- Support vision of India as the “pharmacy of the world” expanding to biosimilars
- Drive investments into developing biosimilars manufacturing infrastructure
- Cost savings for Indian healthcare system and patients
- Develop talent pool for sophisticated biologics engineering
For Global Pharma/Biotech Sector:
- Spur new growth area via development of biosimilars portfolio by Big Pharma
- Force biotech innovation beyond me-too biologics to truly novel therapies
- Enable access to biotech innovation for wider patient populations unlocking new demand
Long Term Negatives
However, there are some long term negatives to consider as well:
For Incumbent Biologic Companies:
- Accelerated erosion of market share and revenues due to multi-player biosimilar competition
- Shorter lifecycles for biologic assets given limited exclusivity period
- Pressure to demonstrate continuous innovation of existing biologics to differentiate value
For Biosimilar Manufacturers:
- Crowded competitive landscape leading to price erosion
- High costs and long timelines to develop and manufacture biosimilars
- Uncertainty regarding biosimilarity approvals and litigation from reference product companies
For Emerging Markets:
- Potential intellectual property issues if legal frameworks for biosimilars are unclear or transparency is inadequate regarding clinical trials data to establish biosimilarity.
For Investors in Public Markets:
- Difficulty in predicting winners as more competitors enter biosimilars markets across developed and emerging countries
- Policy changes regarding biosimilar substitution, reimbursement etc keep markets dynamic
- Opaqueness around which companies have robust biosimilar pipelines and manufacturing capabilities as capabilities are still emerging
Short Term Benefits
Over the next 3-5 years, this deal offers some tangible benefits:
- Immediate licensing revenue from mAbxience deal
- Potential funding interest from global investors attracted to partnership with Spanish firm
- Stronger position to ink more regional/global biosimilar deals
- Rapid access to highly attractive emerging markets for its biosimilar portfolio
- Leverage Intas’ commercialization infrastructure across complex markets
For Indian Healthcare Sector:
- Enhanced exports and foreign capital inflows contributing to economic growth
- Support government “Make in India” outlook especially for biopharma sector
For Global Pharma:
- Acceleration in the number of biosimilar licensing deals for developed markets as more reference product exclusivity periods near expiration dates
However, there are some short term risks as well:
- Management distraction from core generics business which generates cash flows currently
- Potential integration challenges with Spanish partner firm
For Incumbents like Amgen:
- Leadership focus shifts to legal tactics to delay biosimilar entries limiting management bandwidth for pipeline productivity
- Period of uncertainty predicting which biosimilar partnerships will gain commercial traction
- Difficulty deciphering sound fundamentals during this transitional phase within the global pharma sector
Potential Gains and Losses from Intas-mAbxience Biosimilar Deal:
Indian Companies Gaining:
- Intas Pharmaceuticals Ltd. (INTAS):
- Secures exclusive rights to a potentially blockbuster drug in over 150 markets, boosting future revenue and market share.
- Strengthens biosimilar portfolio and establishes Intas as a global player in the space, potentially attracting investor interest and driving share price increase.
- Other Indian Biosimilar Manufacturers:
- Increased focus on biosimilars in India could benefit companies like Zydus Cadila, Biocon, and Cipla who have growing biosimilar pipelines.
- Positive sentiment towards the Indian biosimilar sector as a whole is likely.
- Indian Healthcare Service Providers:
- Increased availability of biosimilars like Etanercept at lower costs could improve access to treatment for autoimmune diseases in India, benefiting hospitals and healthcare networks.
- Long-term positive impact on healthcare infrastructure and accessibility is expected.
Indian Companies Potentially Losing:
- No significant Indian companies appear likely to be negatively impacted by this news.
Global Companies Gaining:
- Secures a large and experienced partner for global distribution of its Etanercept biosimilar, boosting revenue and potentially attracting further partnerships.
- Positive market sentiment towards its successful deal and potential future growth is expected.
- Other Biosimilar Developers:
- Increased demand for biosimilars like Etanercept globally could benefit other companies with similar products in the pipeline, such as Sandoz and Samsung Bioepis.
- Positive sentiment towards the global biosimilar market as a whole is likely.
- Patients in Etanercept Markets:
- Increased competition from biosimilars could eventually lead to lower prices for Etanercept, making it more affordable for patients worldwide.
- Positive impact on healthcare accessibility and affordability is expected long-term.
Global Companies Potentially Losing:
- Biosimilar entry in Europe and other markets will erode Enbrel sales and market share, potentially impacting Amgen’s revenue and stock price.
- Investor concerns about patent expiry and litigation in the US might lead to cautious sentiment.
- Healthcare Providers in Enbrel-Dominated Markets:
- Transition to biosimilars could require adjustments in prescribing and treatment protocols, potentially causing short-term disruptions for some healthcare providers.
- Minimal overall impact on the sector is expected long-term.
Note: This analysis is based on the provided information and market trends. Actual outcomes may differ due to unforeseen circumstances and individual company performance.
I hope this provides a clear and concise overview of potential gains and losses for different companies due to the Intas-mAbxience biosimilar deal. Remember to consider individual company factors and potential regulatory changes when assessing market sentiment.
Citation: ET Bureau. (2023, December 23). Intas Inks Pact with Spain’s mAbxience to Sell Biosimilars.